Smt. Parvesh Mahajan, W/o. Shri Suresh Kumar Mohajan, Gurdaspur V. The Income-tax Officer, Pathankot

ITA 444/ASR/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6469 (ITAT-AMRITSAR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-04-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 05-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: P N ARORA
• Keywords: Opportunity of being heard
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.444 (ASR)2011 ASSESSMENT YEAR:2007-08 PAN:ADQPM8371D SMT. PARVESH MAHAJAN VS. INCOME TAX OFFICER, W/O SH. SURESH KUMAR MAHAJAN, WARD-3, PATHANKOT. GURDASPUR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. P.N. ARORA, ADV. RESPONDENT BY:SH. AMRIK CHAND, DR DATE OF HEARING :10/04/2012 DATE OF PRONOUNCEMENT:11/04/2012 ORDER PER BENCH; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDE R OF THE CIT(A), AMRITSAR, DATED 01.07.2011 FOR THE ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. THAT THE ASSESSMENT ORDER AS WELL AS THE ORDER OF THE LD. CIT(A), ARE BOTH AGAINST THE FACTS OF THE CASE & UN TENABLE IN LAW. 2. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRM ING THE ADDITION OF RS.53,00,000/- WITHOUT APPRECIATING THE FACT TH AT THE AO ITA NO.444(ASR)/2011 AY 2007-08 2 NEVER ALLOWED ANY REASONABLE OPPORTUNITY OF BEING H EARD BEFORE MAKING THIS HEAVY ADDITION. 3. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRM ING THE ADDITION OF RS.53,00,000/- MADE BY THE AO ON ACCOUN T OF SO- CALLED INVESTMENT MADE OUT OF THE BOOKS OF ACCOUNTS FOR THE PURCHASE OF LAND. THE AUTHORITIES BELOW FAILED TO A PPRECIATE THAT THIS AMOUNT OF RS.52,00,000/- WAS RECEIVED FROM M/S . STAR STICHERS (P) LTD. ON 05/01/2007 AND ULTIMATELY THE SAME AMOUNT WAS RETURNED TO M/S. STICHERS P. LTD. ON 31.03.2007 . 4. THAT THE AUTHORITIES BELOW DID NOT APPRECIATE TH AT M/S. STAR STICHERS PVT. LTD. IS AN EXISTING ASSESSEE AND THE SOURCE OF INVESTMENT WAS DULY EXPLAINED BY FILING THE COPY OF ACCOUNT FROM THE SAID FIRM AND IT WAS DULY PROVED THAT THE COMPANY/CREDITOR IS AN EXISTING ASSESSEE WHO WAS CA RRYING ON BUSINESS AND AS SUCH THE IDENTITY OF THE PERSON WAS DISCLOSED AND THE SOURCE OF INVESTMENT WAS PROVED AND IT WAS ALSO PROVED THAT THE CREDITOR IS AN EXISTING ASSESSEE.AS SUCH THE ADDITION MADE MAY BE DELETED WHICH IS NOT CALLED FOR UNDER T HE CIRCUMSTANCES OF THE CASE. 5. AGAIN THE LD. CIT(A) HAS NOT APPRECIATED THE FAC TS, THE MATERIAL AND THE DOCUMENTS FILED BEFORE THE AO AND ALSO BEFO RE HIM AND THE LD. CIT(A), HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS.53,00,000/- WITHOUT APPRECIATING THE FACTS, MATE RIAL AND THE CIRCUMSTANCES OF THE CASE. AS SUCH, THE ADDITION CO NFIRMED BY THE LD. CIT(A) IS UNJUSTIFIED, UNCALLED FOR AN UNWA RRANTED UNDER THE CIRCUMSTANCES OF THE CASE AND THE ADDITION MADE IS LIABLE TO BE DELETED. 6. SIMILARLY, THE LD. CIT(A) DID NOT APPRECIATE TH AT THERE WAS NO MATERIAL & REASON FOR NOT ACCEPTING THE EXPLANATION OF THE ASSESSEE BEFORE THE AO AND BEFORE HIM. THUS, THE AD DITION CONFIRMED BY THE LD. CIT(A) IS NOT AT ALL JUSTIFIED AND THE SAME MAY BE DELETED, AS THE LD. CIT(A) HAS NOT APPRECIAT ED THAT THE SOURCE OF THE CREDIT WAS DULY PROVED AND THE EXPLAN ATION OF THE SAME WAS DULY FURNISHED ALONG WITH THE NECESSARY EV IDENCE BEFORE THE AO. AS SUCH THE ADDITION OF RS.53,00,000 /- MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) MAY BE DELET ED AS THE ADDITION MADE BY THE AO IS NOT AT ALL CALLED FOR UN DER THE FACTS & CIRCUMSTANCES OF THE CASE. 7. AGAIN, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFI RMING THE ADDITION OF CHARGING INTEREST U/S 234A, 234B, 244A( 3) & 234D ITA NO.444(ASR)/2011 AY 2007-08 3 OF THE ACT. THE LD. CIT(A) DID NOT APPRECIATE THAT NO REASONABLE OPPORTUNITY OF BEING HEARD WAS ALLOWED B Y THE AO BEFORE CHARGING THE INTEREST AND AS SUCH THE INTERE STS CHARGED UNDER THESE SECTIONS OF THE ACT, ARE LIABLE TO BE D ELETED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAD PURCHASED LAND FOR RS.73 LAKHS FROM RADHA SWAMI SATSANG BEAS, KARAN BA N TALAB JAMMU DURING THE YEAR AND MADE CASH PAYMENT OF RS.60 LAKH S TO THE SAID TRUST AND THE SAID TRUST HAD DEPOSITED RS.60 LAKHS IN THEIR B ANK ACCOUNT ON DIFFERENT DATES AS UNDER: DATE AMOUNT OF PAYMENT MODE OF PAYMENT 4.2.2007 RS.20,00,000/- BY CASH 7.2.2007 RS.20,00,000/- BY CASH 9.2.2007 RS.20,00,000/- BY CASH IN RESPONSE TO THE NOTICE, THE ASSESSEE SUBMITTED R EPLY DATED 10.3.2009 AND FILED THREE COPIES OF SALE DEEDS OF RS.20 LAKHS EAC H AND A COPY OF ACCOUNT OF M/S. SHREE RAM CHANDER FINANCE CO. PATHANKOT CER TIFYING THAT A LOAN OF RS. 73 LAKHS HAS BEEN RAISED FROM THEM ON DIFFERENT DATES AS UNDER: DATE MODE OF PAYMENT AMOUNT 29.01.2007 BY CHEQUE RS.10 LAKHS 29.01.2007 BY CHEQUE RS.10 LAKHS 31.3.2007 BY CHEQUE RS.53 LAKHS TOTAL: RS.73 LAKHS IT WAS SUBMITTED BY THE ASSESSEE THAT THE PROPERTY WAS PURCHASED FOR RS. 60 LAKHS FROM RADHA SWAMI SATSANG BEAS AT KERAN BAN TA LLAB JAMMU AND ITA NO.444(ASR)/2011 AY 2007-08 4 TOTAL AMOUNT SPENT INCLUDING RS.60 LAKHS WAS RS. 73 LAKHS. THE ASSESSEE HAD MADE THE FOLLOWING CASH WITHDRAWALS: DATE AMOUNT 29.01.2007 RS. 8 LAKHS 29.01.2007 RS. 8 LAKHS 29.03.2007 RS. 4 LAKHS TOTAL RS.20 LAKHS IT WAS OBSERVED BY THE AO THAT THE ASSESSEE HAD MAD E PAYMENT OF RS. 20 LAKHS OUT OF HIS BANK ACCOUNT FOR THE PURCHASE OF L AND AND THE BALANCE PAYMENT OF RS.53 LAKHS COULD NOT BE EXPLAINED BY HE R. ON SHOW CAUSE GIVEN FOR 15.12.2009, THE ASSESSEE FILED THE REPLY DATED 21.12.2009 WHICH FOR THE SAKE OF CLARITY IS REPRODUCED AS UNDER: AS REGARDS INVESTMENT I WANT TO BRING TO YOUR HONO URS NOTICE THAT THE IMPUGNED PROPERTY WAS AGREED TO BE PURCHASED BY STAR STITCHERS PVT. LTD. 1/172B DILSHAD GARDEN DELHI 110095 WITH P AN NUMBER ABBFS3052L FROM RADHA SWAMI SATSANG BEAS ITS DIRECT OR MR. NIRMAL JAIN. BUT AS NEITHER THE LIMITED COMPANY NOR ANY OF ITS DIRECTOR HAD STATE SUBJECT OF JAMMU & KASHMIR THAT PROPERTY COULD NOT BE REGISTERED IN THEIR NAMES. SO THEY APPROACHED ME TO GET THE SALE DEED EXECUTED IN MY FAVOUR AS TIME PERIOD WITH THEM WAS VERY SHORT AND ADVANCED RS.52 LAKHS TO ME FOR GETTING THE NEEDFUL DONE AND GOT THE SALE DEEDS EXECUTED IN MY FAVOUR. I PROMISED TO TRA NSFER TO THAT FIRM OR THEIR NOMINEE THE SAID PROPERTY ON THE SAME COST ON OR BEFORE 15.3.2009. THE FIRM AND ITS DIRECTOR WERE FINDING H ARD TO GET THE STATE SUBJECT OR GET A SUITABLE BUYER OF THAT PROPERTY BE FORE THE DATE FIXED. ULTIMATELY AS PER MUTUAL AGREEMENT THEY RECEIVED BA CK RS. 52 LAKHS FROM ME ON 31.3.2009. THE AMOUNT WHICH WAS PAID BAC K TO THE FIRM WAS OUT OF LOAN OF RS. 73 LAKHS RAISED BY ME FROM M /S. SHRI RAM CHANDER FINANCE CO., PATHANKOT COPY OF ACCOUNT OF W HICH ALREADY PLACED ON THE FILE. THE AMOUNT OF RS.53 LAKHS WAS W ITHDRAWN BE ME FROM MY SAVING BANK ACCOUNT NUMBER 31220 OF OBC PAT HANKOT ON ITA NO.444(ASR)/2011 AY 2007-08 5 29.03.2007 AND FROM THIS AMOUNT OF RS.52 LAKHS WAS PAID BACK TO THAT FIRM. COPY OF AGREEMENT WITH THAT FIRM, COPY OF ACC OUNT OF THE BOOKS OF THAT FIRM AND COPY OF ACKNOWLEDGMENT OF RETURN F OR 2007-08 OF THAT FIRM ARE ENCLOSED FOR READY REFERENCE. THE AO OBSERVED THAT THE ASSESSEE TRIED TO SHIFT HE R BURDEN ON M/S. SAR STICHERS PVT. LTD. THE SAID STATEMENT OF THE ASSES SEE IS TOTALLY UNBELIEVABLE AND IS AGAINST HER STATEMENT RECORDED U/S 131 OF TH E ACT IN WHICH SHE HAS MADE NO REFERENCE OF THE ADVANCE RECEIVED FROM M/S. SAR STITCHERS PVT. LTD. THE ASSESSEE ALSO STATED THAT M/S. SAR STITCHERS H AD ADVANCED RS. 52 LAKHS IN CASH TO HER FOR PURCHASE OF LAND ON THEIR BEHALF BUT INSTEAD OF TRANSFERRING THE LAND TO THE ASSESSEE, THE ASSESSEE RETURNED BAC K RS. 52 LAKHS IN CASH ON 31.03.2007. THE AO DOUBTED THE AGREEMENT OF M/S. SA R STITCHERS PVT. LTD. AND ADVANCING MONEY TO THE ASSESSEE AND THEN RETURN ING BACK THE SAME CONSIDERING THE SAME AS AFTER MADE STORY, WHICH IS TOTALLY AGAINST THE STATEMENT OF THE ASSESSEE FILED IN RESPONSE TO SUMM ONS U/S 131 OF THE ACT. THE AO ACCORDINGLY TREATED RS.53 LAKHS AS UNEXPLAIN ED AND ADDED TO THE INCOME OF THE ASSESSEE. 5. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSES SING OFFICER. 6. THE LD. COUNSEL FOR THE ASSESSEE, SH. P.N. AROR A, FIRST OF ALL INVITED OUR ATTENTION TO THE BANK STATEMENT PLACED ON RECOR D IN WHICH THE LOAN OF RS.73 LAKHS TAKEN HAD BEEN CREDITED AND RS. 20 LAKH S WITHDRAWN ON ITA NO.444(ASR)/2011 AY 2007-08 6 29.01.2007 AND RS. 53 LAKHS WITHDRAWN ON 29.03.2007 ARE DEPICTED IN THE BANK STATEMENT OF OBC ACCOUNT NO.01282010031220, PB -99 TO 102. AS REGARDS RS.20 LAKHS WITHDRAWN AS RS. 8 LAKHS, RS.8 LAKHS AND RS. 4 LAKHS ON 29.01.2007, ARE FROM THE LOAN TAKEN FROM M/S. SHRI RAM CHANDER, PATHANKOT, IS NOT UNDER DISPUTE. AS REGARDS THE RES T OF THE PAYMENTS GIVEN BY THE ASSESSEE TO RADHA SWAMI SATSANG BEAS KERAN BAN TALLAB, JAMMU, THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT THE COPY O F AGREEMENT PLACED AT PB 10 & 11, WHICH IS AN AGREEMENT ENTERED INTO BY M/S. SAR STITCHERS PVT. LTD. AND THE ASSESSEE ON 5 TH JANUARY, 2007 WHERE THE SAID M/S. SARS STITCHERS P VT. LTD. HAD AGREED TO PURCHASE THE BUILDING OF RADHA S WAMI SATSANG BEAS KERAN BANK TALLAB, JAMMU FOR RS.60 LAKHS PLUS EXPEN SES AND AGREED TO GET THE SALE DEED EXECUTED ON OR BEFORE 09.02.2007. IT IS ALSO MENTIONED IN CLAUSE -1 OF THE AGREEMENT THAT RS.52 LAKHS HAVE BE EN PAID TO THE ASSESSEE TO GET THE SALE DEED EXECUTED. AT PAGE 12 OF PAPER BOO K,M/S. SAR STITCHERS PVT. LTD; HAD SHOWN ITS INABILITY TO GET THE SALE DEED E XECUTED BECAUSE THERE IS NO STATE SUBJECT OF ANY OF THE DIRECTORS OF THE COMPAN Y AND THE COMPANY HAD CONFIRMED OF HAVING RECEIVED THE CASH BACK ON 31.03 .2007. THE SAID CONFIRMATION IS SIGNED BY M/S. SAR STITCHERS PVT. L TD. AND THE ASSESSE. AT PAGE 13 OF THE PAPER BOOK, THE DETAIL OF PAN NUMBER , AT PB-14, COPY OF ACCOUNT OF M/S. SAR STITCHERS PVT. LTD. DULY SIGNED BY THE DIRECTOR IS ITA NO.444(ASR)/2011 AY 2007-08 7 ON RECORD. COPY OF THE INCOME-TAX RETURN IS PLACED AT PB-15. THE COPY OF AUDITED ACCOUNTS IS PLACED AT PB 16 TO 19 OF M/S. S AR STITCHERS PVT. LTD. AS REGARDS THE STATEMENT OF THE ASSESSEE ON 17.8.2009, IT WAS POINTED OUT BY MR. P.N. ARORA, THE LD. COUNSEL APPEARING FOR THE ASSES SEE THAT THE AO ISSUED SUMMONS TO THE ASSESSEE DATED 10.08.2009 (COPY PLAC ED AT PB-6) AND ASKED FOR CERTAIN DETAILS TO BE PRODUCED BEFORE HIM. THE ASSESSEE PRODUCED THE SAID DETAILS VIDE LETTER DATED17.09.2009 AVAILABLE AT PB -7. IT WAS ARGUED THAT THE DETAILS AS REQUIRED BY THE A.O. WERE SUBMITTED. IN RESPONSE TO NOTICE ISSUED ON 9.12.2007 FOR 15.12.2009, THE ASSESSEE SUBMITTED THE EXPLANATION VIDE LETTER DATED 21.12.2009, WHICH IS A MATTER OF RECOR D AND HAS BEEN REPRODUCED BY THE AO HERSELF AT PAGE 3 OF HER ORDER WHERE THE ASSESSEE HAD EXPLAINED OF THE AGREEMENT WITH M/S. SAR STITCHERS PVT. LTD. AND THE ADVANCE SO RECEIVED WHICH WAS REFUNDED BACK SINCE THE SAME COULD NOT BE MATERIALISED. THE SAID SAR STITCHERS PVT. LTD. IS REGULARLY ASSESSED TO TA X IS ALSO A MATTER OF RECORD. THE ASSESSEE HAD DISCHARGED HER ONUS OF EXPLAINING THE SOURCE OF THE PAYMENT TO M/S. RADHA SWAMI SATSANG BEAS KERAN BAN TALLAB JAMMU AND IT IS FOR THE DEPARTMENT TO DISCHARGE ITS ONUS BY P ROVING THE ASSESSEE AS FALSE WHICH HAS NOT BEEN DONE BY THE DEPARTMENT . THE ASSESSEE HAD PAID INTEREST TO M/S. SHRI RAM CHANDER FINANCE CO. IS A MATTER OF RECORD AND AVAILABLE AS PER CONFIRMED COPY OF ACCO UNT AT PB 41, 84 & ITA NO.444(ASR)/2011 AY 2007-08 8 85. A COPY OF AFFIDAVIT WAS ALSO PLACED ON RECORD B Y THE DIRECTOR OF M/S. SAR STITCHERS PVT. LTD. AT PB 43, 44 & 45. THE OBJECTIO NS BY THE LD. CIT(A) HAVE ALSO BEEN MET OUT BY THE LD. COUNSEL FOR THE ASSESS EE IN WRITING WHICH ARE AVAILABLE AT PB 60 TO 63A. THEREFORE, THE LD. COUNS EL FOR THE ASSESSEE, SH. P.N. ARORA PRAYED TO REVERSE THE ORDER OF THE LD. C IT(A) AND ALLOW THE APPEAL OF THE ASSESSEE. 7. ON THE OTHER HAND, THE LD. DR, SH. AMRIK CHAND A PPEARING FOR THE REVENUE RELIED UPON THE ORDERS OF THE AUTHORITIES B ELOW AND THE FINDINGS OF THE LD. CIT(A) VIDE PARA 9.1 TO 9.3. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE H AD ENTERED INTO AN AGREEMENT WITH M/S. RADHA SWAMI SATSANG BEAS, KERAN BAN TALLAB JAMMU FOR PURCHASE OF PROPERTY AT RS.60 LAKHS FOR WHICH T HE ASSESSEE HAS PLACED ON RECORD COPY OF SALE DEED ALSO. THE ASSESSEE HAD TAK EN LOAN OF RS.73 LAKHS FROM SHRI RAM CHANDER FINANCE CO. WHICH IS CREDITED ON 29.01.2007 & 29.03.2007 BY RS. 20 LAKHS AND RS.53 LAKHS RESPECTI VELY. THE ASSESSEE HAD WITHDRAWN RS. 20 LAKHS ON 29.01.2007 IN THREE INSTA LMENTS ON 29.01.2007 AT RS. 8 LAKHS, RS. 8 LAKHS AND RS. 4 LAKHS. THEREFORE , THE SOURCES OF RS.20 ITA NO.444(ASR)/2011 AY 2007-08 9 LAKHS FOR PAYMENT TO RADHA SWAMI SATSANG KERAN BAN TALLAB, JAMMU, ARE NOT IN DISPUTE. AS REGARDS THE EXPENSES OF RS.13 LA KHS AND RS. 40 LAKHS, PAYMENT TO RADHA SWAMI SATSANG BEAS KERAN BAN TALAB JAMMU, THE ASSESSEE HAD PLACED AN AGREEMENT WITH SAR STITCHERS PVT. LTD AVAILABLE AT PB 10-11 ALONGWITH COPY OF CONFIRMATIONS, PAN NUMBER, INCOME-TAX PARTICULARS AND AUDITED ACCOUNTS. THE AO HAS NOT FO UND ANY DEFECT IN THE SAID AGREEMENT, CONFIRMATIONS ETC. OF THE SAID SAR STITCHERS PVT. LTD. THE ASSESSEE HAS DISCHARGED HER ONUS OF PROVING THE SOU RCE OF RS.53 LAKHS TAKEN FROM M/S. SAR STITCHERS PVT. LTD; AS PER AGREEMENT DATED 5 TH JANUARY, 2007 (PB-10 & 11). NOTHING ADVERSE HAS BEEN BROUGHT ON RECORD BY ANY OF THE AUTHORITIES BELOW IN THIS REGARD. THE AO COULD SUMM ON M/S. SAR STITCHERS PVT. LTD. OR ITS DIRECTOR, WHICH AUTHORITIES LIES W ITH THE AO UNDER THE INCOME-TAX U/S 131 OF THE ACT AND THE SAME HAS NOT BEEN USED BY THE A.O. AT THE SAME TIME, THE AO PROCEEDED TO CONCLUDE THE MATTER PURELY ON ARBITRARINESS, SURMISES AND CONJECTURES TO DOUBT TH E AGREEMENT ENTERED INTO BY M/S. SAR STITCHERS PVT. LTD; WITH THE ASSESSEE A LONGWITH THE CONFIRMATION OF THE AMOUNT GIVEN AND TAKEN BACK. IN THE ABSENCE OF ANY EVIDENCE AGAINST THE ASSESSEE OR ADVERSE MATERIAL TO REBUT THE EXPLA NATION GIVEN BY THE ASSESSEE, THE AO IS NOT JUSTIFIED TO TREAT THE AMOU NT OF RS.53 LAKHS AS UNEXPLAINED. THE AO, THEREFORE, IS DIRECTED TO ACCE PT THE CLAIM OF THE ITA NO.444(ASR)/2011 AY 2007-08 10 ASSESSEE AND DELETE THE ADDITION MADE BY HER. THE O RDER OF THE LD. CIT(A) IS DIRECTED TO BE REVERSED. THUS, ALL THE GROUNDS OF A PPEAL OF THE ASSESSEE ARE ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.444(ASR)/2011 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11TH APRIL, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11TH APRIL, 2012 /SKR/ COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE:SMT. PARVESH MAHAJAN, GURDASPUR. 2. THE ITO WARD-3, PATHANKOT. 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5. THE SR DR, ITAT, ASR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH : AMRITSAR.